FEDERAL COURT OF AUSTRALIA In the matter of Short Pty Ltd (in liq) ACN 008 264 695 [2005] FCA 1010 CORPORATIONS – company in liquidation – application to terminate the winding up – company solvent – application unopposed Corporations Act 2001 (Cth) ss 475, 482 Federal Court (Corporations) Rules 2000 r 2.8 Dubolo Pty Ltd (t/as Fender Signs) v Codrington Investment Corporation Pty Ltd (1998) 26 ACSR 723 cited In the matter of G.I. & L.M. Short Pty Ltd (in liquidation) ACN 008 264 695 No S142 of 2005 FINN J ADELAIDE 22 JULY 2005 IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SAD 142 OF 2005 IN THE MATTER OF G.I. & L.M. SHORT PTY LTD (IN LIQUIDATION) ACN 008 264 695 BETWEEN: GREGORY IAN SHORT AND LORNA MARGARET SHORT PLAINTIFFS AND: G.I. & L.M. SHORT PTY LTD (IN LIQUIDATION) DEFENDANT JUDGE: FINN J DATE OF ORDER: 22 JULY 2005 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: (1) Upon the plaintiffs by their counsel undertaking that they will instruct the liquidator Mark Christopher Hall to pay in full from the sum of $300,000 which they have deposited in the liquidator's trust account the amounts owing to creditors of G.I. & L.M. Short Pty Ltd (in liquidation) referred to in the affidavit of Gregory Ian Short sworn 28 June 2005, the costs of the petitioning creditor and the costs and expenses of the liquidator; and (2) The winding up of G.I. & L.M. Short Pty Ltd (in liquidation) be terminated as of today's date. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SAD 142 OF 2005 IN THE MATTER OF G.I. & L.M. SHORT PTY LTD (IN LIQUIDATION) ACN 008 264 695 BETWEEN: GREGORY IAN SHORT AND LORNA MARGARET SHORT PLAINTIFFS AND: G.I. & L.M. SHORT PTY LTD (IN LIQUIDATION) DEFENDANT JUDGE: FINN J DATE: 22 JULY 2005 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 The plaintiffs in this proceeding, Gregory Short and Lorna Short, are the directors and shareholders of the defendant company, G.I. and L.M. Short Pty Ltd (in liquidation). The company was wound up by order of this Court on 13 April 2005 on the grounds of insolvency. The company had failed to comply with a statutory demand of the Australian Deputy Commissioner of Taxation in respect of a debt due to the Australian Taxation Office. 2 The present application under s 482(1) of the Corporations Act 2001 (Cth) ("the Act") is to have the winding up of the company terminated. The circumstances in which the winding up took place demonstrated a deal of neglect and laxness by the directors of the company and, seemingly, of their accountant in relation to the financial affairs of the company. What, though, is clear and it is evidenced in the Report as to Affairs prepared under s 475(1) of the Act, is that the company is indeed healthily solvent. It is because the directors wish to continue to carry on the business of the company that they have bought this application. 3 The application is not opposed by the liquidator who, on 20 June 2005, was put in funds in the amount of $300,000 by Mr Short to cover payment to all creditors in full upon the making of any order by this court in this proceeding. That sum was fixed by reference to the liquidator's analysis of the books and records of the company, his assessment as to creditors of the company, and professional fees that were likely to be involved in respect of the application bought by the plaintiffs. 4 A body of evidence has been put on in relation to the various debts of the company and I am satisfied that the sum of $300,000 is adequate to meet those debts. Importantly, the Australian Deputy Commissioner of Taxation does not oppose the order sought in these proceedings and its debt is the principal debt owing by the company. 5 I am satisfied that the order sought is in the interests of the company's creditors. I am satisfied that the plaintiffs have discharged their onus of making out a positive case for the termination order. As I have indicated, the known debts of the company will be paid on the making of my proposed order, that order being conditioned on an undertaking given by the plaintiffs that they will instruct the liquidator to pay in full the amounts owing to creditors and which have been identified in Mr Short's affidavit. 6 Notice of this application is required to be served on the Australian Securities and Investment Commission ("ASIC"), see Federal Court (Corporations) Rules 2000, r 2.8. ASIC has notified the defendant's legal representatives by letter that it has no objection to the orders sought in this proceeding. I regard this indication from ASIC as of some significance in that it does not suggest there is any significant reason relating to considerations of public interest why the order should not be made. 7 I am satisfied on the material before me that while a laxness was demonstrated in the conduct of the company's affairs leading up to the making of the winding up order, that order itself and its consequences have provided a salutary lesson indeed to Mr and Mrs Short. They do appear to have been otherwise successful in carrying on the business of the company. I do not consider there to be demonstrated a lack of commercial morality or any risk to the public interest which would justify denying the application: on the considerations of which cannot ordinarily be taken in a matter of this variety, see e.g. Dubolo Pty Ltd (t/as Fender Signs) v Codrington Investment Corporation Pty Ltd (1998) 26 ACSR 723 at 724. 8 Accordingly I will make the following orders: (1) Upon the plaintiffs by their counsel undertaking that they will instruct the liquidator Mark Christopher Hall to pay in full from the sum of $300,000 which they have deposited in the liquidator's trust account the amounts owing to creditors of G.I. & L.M. Short Pty Ltd (in liquidation) referred to in the affidavit of Gregory Ian Short sworn 28 June 2005, the costs of the petitioning creditor and the costs and expenses of the liquidator; and (2) The winding up of G.I. & L.M. Short Pty Ltd (in liquidation) be terminated as of today's date. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. Associate: Dated: 26 July 2005 Counsel for the Applicant: Ms R Field Solicitor for the Applicant: Adelta Legal Counsel for the Respondent: Mr G King Solicitor for the Respondent: Griffin Hilditch Date of Hearing: 22 July 2005 Date of Judgment: 22 July 2005